Both buyers and agents have recognised stamp duty as a big hurdle for first timers looking to start their housing journey. Many influential companies and people have commented on the tax, calling for something to be done and claiming it holds back transactions and the fluidity of sales.
The Evening Standard yesterday ran an article badged as “exclusive”, claiming Philip Hammond, Chancellor of the Exchequer, has been considering a budget move that will “aim to help people in their twenties and thirties” restoring what he claims as ‘inter-generational fairness’ to the system. However, it is unclear if this is applied specifically to London or UK-wide.
The Evening Standard – whose editor is former Chancellor George Osborne – commented:
“Stamp Duty is a massive extra cost for people trying to buy their first home, especially in London”.
“It means a tax bill of £11,427 for the average first-time buyer in the capital, according to the Land Registry, which recorded the average price paid by new entrants to the London property market as £428,546. Even a starter flat costing £250,000 attracts a Stamp Duty bill of £2,500.”
“Mr Hammond is looking for ways to restore young people’s faith in the system at a time when senior ministers fear the link between working hard and getting on has been badly weakened.”
Backing The Evening Standard, data firm Hometrack further explored the newspapers elaboration on issues related to the tax, explaining that this is only one step in many reductions needed to make housing more affordable to first time buyers:
“Any move by the Government to reduce the impact of Stamp duty on housing market activity and potentially offer savings amounting to several thousand pounds for first-time-buyers is welcome. However, Stamp Duty is just one consideration impacting the ability of first-time buyers to access the housing market. Mortgage affordability testing remains a major hurdle.”
“If the Budget was to cut Stamp Duty for first time buyers in London to a flat 1%, then our analysis shows this would save first-time buyers in London an estimated £340m per annum out of a total annual Stamp Duty bill across the UK of £8.6bn, representing a 4% reduction in total Stamp Duty receipts.”
While these opinions are still up for dispute, a variance of agencies exemplified by James Pendleton, located in the south and west of London, has outlined that this is not the case for all areas of the first-time buyer market. Despite the fall in Flat sale numbers within London, showing a decline of almost half for the agency, from 4,709 to 2,494 in 2017, the company has not found correlations within other properties they sell, with detached properties falling by 5%, semi-detached sales down by 1% and terrace houses only down by 8%.
While Stamp duty reduction is only under consideration with no push for it to begin in the near future, all first-time buyers can do is wait. Nevertheless, under many local agent opinions, this could considerably shift the demand away from flats, indirectly driving first time buyers towards different property types and potentially new areas within London and the rest of the UK. For more information, access their article here.
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